Market Report: Laird pays the price for 'overblown' rise
Tuesday 11 September 2012
The hype and hullabaloo ahead of Apple's iPhone 5 launch tomorrow has not spread to one of its suppliers – Laird. The company, which started life in 1824 as a shipbuilder in Birkenhead's docks but is now a high-tech electronics company that supplies smart phone makers, tumbled to the bottom of the FTSE 250.
Analysts at Goldman Sachs computed that its share price now looks "increasingly expensive with below-average returns."
Goldman's scribes yesterday downgraded it to sell with a share price target of 210p – down from 235p.
Laird's problem appears to be that the share price rise that followed its half-year results in July now looks overblown.
Laird's exposure to consumer electronics leaves it with a "weak score" in Goldman's eyes. Despite the success of its electromagnetic interference shielding which it sells to smartphone makers, Goldman's experts think its dependency on large consumer electronics and a poor track record of managing cash makes it a sell. Its shares dropped 10.1p to 230.5p.
The FTSE 100 reached 5,800 during the day, but fell again and ended close to where it had started, down 1.6 points to 5,793.2.
Miners led the pack as hopes for further stimulus in China and the US pushed them higher.
The long-awaited Glenstrata merger helped Xstrata, up 12.5p to 1026.5p, while commodities trader Glencore fell 8.05p to 370p after it submitted its revised $36bn (£22bn) takeover bid.
But Australia's mining sector was hit by news that BHP Billiton and Xstrata are cutting high-cost coal production in the country due to weak prices and rising costs. BHP Billiton shed 4p to 1,910p.
Idle traders let old takeover rumours rumble on, and the persistent, but much-doubted speculation that retailer Marks & Spencer could be subject to a takeover bid accompanied a share price rise of 9.9p to 371.1p.
Online gaming group bwin.party regained some of the falls of the previous week and was up 7.5p to 103.7p.
Have the wheels come off at Chariot Oil & Gas?
Question arose yesterday after the Aim-listed, Africa-focused oil and gas group admitted it has found yet another dry well.
Punters in the stock must have strong stomachs – a high-risk strategy has not always paid off.
The group's shares saw almost half of their value disappear in May when the company announced that its Tapir South exploration well off the Namibian coast was dry.
In its latest announcement yesterday, Chariot said its Kabeljou exploration well, its last drilling programme this year, found "no commercial hydrocarbons" and the company has therefore plugged and abandoned it.
Last week the shares slumped when fears about the results at the Kabeljou well emerged. The company was forced to issue a statement to say the results were "not yet known".
Despite the huge setback, Chariot's chief executive Paul Welch, said: "The fact that we encountered source rock within this well is important.
"The Nimrod prospect was our largest target in the south but there are still other areas of interest in this licence.
"We will be discussing these findings and the next steps with our partners, Petrobras and BP, and will update the market with plans in due course."
The company's shares plunged by 66 per cent – down 65.25p to 33p.
Meanwhile, Tullow Oil stumbled on news that it had found gas not oil at a well off the coast of Kenya.
It said the ongoing drilling remains on course to "test for any deeper oil potential within this gas prone region." Its shares lost 18p to 1,386p.
UK Coal gave some guidance on its proposed restructuring yesterday afternoon and its shares moved up 2.58p to 6.58p. It said that its proposed restructuring is on track to be completed by the end of the year.
On Aim, Coal of Africa, a stock that has had vague whispers of bid talk surround it earlier this month, gained 2p to 20p.
The FTSE 100 quarterly review is set for tomorrow. A slowdown in trading in the City of London is to blame for the likely relegation of City broker Icap. Its shares fell by 1.5p to 343.4p ahead of the company's likely demotion to the FTSE 250.
FTSE 100 Risers
Kazakhmys 686.5p (up 29p, 4.41 per cent) The copper miner was boosted by a note from analysts at UBS who raised their share price target to buy, up from sell. Miners have enjoyed a strong run on the back of hopes of further stimulus in China and the US.
Barclays 207.75p (up 1.35p, 0.65 per cent) Broker Investec banked on Barclays and gave the stock a target price of 240p.
FTSE 100 Fallers
Associated British Foods 1,280p (down 26p, 1.99 per cent) Despite a good set of results for retailer Primark, the sugar-to-clothes group was hit by problems at an Australian meat factory and highlighted a £100m non-cash charge for the business.
Unilever 2,245p (down 30p, 1.32 per cent) Broker Nomura expects the consumer goods giant to suffer from rising food prices this year.
FTSE 250 Risers
Spirax Sarco 2,126p (up 91p, 4.47 per cent) Goldman Sachs analysts raised their recommendation of the engineering group to buy, up from neutral, and raised their share price target to 2,510p, up from 2,100p.
Ferrexpo 196.5p (up 13.7p, 7.49 per cent) The iron ore miner was boosted by a note from scribes at UBS who raised their target price for the stock to 410p, up from 370p, and rated it a buy.
FTSE 250 Fallers
Premier Farnell 185.4p (down 5.3p, 2.78 per cent) Analysts at Canaccord Genuity issued a hold rating and gave the electronics supplier a share target price of 225p. Its second-quarter trading update is on Thursday.
Premier Oil 376.9p (down 10.5p, 2.71 per cent) Analysts at Liberum Capital switched their rating from hold to sell for the explorer and gave it a share price target of 320p.
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